Despite what you hear in the news every day, some companies are actually run by individuals who will forsake a little of their pay in order to boost company morale and maintain some ethical standing when times are tough. This year, Home Depot Inc.’s chief executive Frank Blake voluntarily gave up a $1.2 million bonus that he was contractually guaranteed in order to take home nearly the same salary last year as he did a year earlier.
To understand the significance you’d have to go back a few years when then-CEO Robert Nardelli was pulling down $245 million over 5 years in salary, stock options and other compensation. And this during a time when the company’s shares lost 8.2% in overall value. The majority of that pay package wasn’t tied to company performance or profitability, a fact that lead to Mr. Nardelli’s stepping down in 2007 (and if you know anything about corporate boards you can read between the lines on that one).
The new CEO pay package has 89% of the compensation tied to performance metrics. This makes so much sense it’s almost amazing that it’s not some kind of law.
Blake will get a salary of $1.01 million for the year ended Feb. 1, an amount that is almost identical to his previous year’s numbers. Home Depot reported that he declined a guaranteed 2008 bonus of around $1.2 million – even though he met the performance metrics for that additional income. Blake’s total salary, perk and stock and option grants were valued at $9.3 million last fiscal year.
So who says all CEOs are evil? (Of course we know they aren’t, but it’s nice to see some news reports of those making good decisions and putting their companies first.) If more CEOs felt this way, the economy might not be in quite such bad shape.